Canada, like the United States, is primarily a drug-consuming country
and also produces
large amounts of marijuana. Much of the Canadian-produced marijuana
is shipped to the U.S.
International drug traffickers frequently attempt to route drug shipments,
primarily heroin,
through Canada to the U.S., taking advantage of the long and open Canada-U.S.
border, the
massive flow of legitimate commerce, and the lower risk of long prison
terms or forfeiture of
assets if caught in Canada compared with the U.S. Money laundering
and chemical diversion
are also problems. Legislation is being drafted to strengthen Canada's
ability to control
money laundering.

With approximately 1,000,000 drug users in Canada, including some
250,000 cocaine
addicts and 40,000 heroin addicts, The Government of Canada's (GOC)
drug control strategy
emphasizes drug abuse prevention and treatment. The law enforcement
component
emphasizes action against organized crime. Canadian law enforcement
officials cooperate
closely with their U.S. counterparts on narcotics investigations and
interdiction efforts.
Canada is a party to the 1988 UN Drug Convention and participates actively
in international
drug control efforts.

II. Status of Country

Narcotics production, distribution, and use are illegal in Canada.
Drugs are smuggled into
Canada for domestic use and for transshipment to the U.S. While the
level of illicit drug
transshipment through Canada to the U.S. is not known, Canadian and
U.S. law enforcement
agencies are taking the problem very seriously, particularly with respect
to Asian-sourced
heroin.

Southeast Asian heroin continues to enter North America predominantly
by sea containers,
but also by air and overland. Major ports of entry include Vancouver,
Montreal, and Halifax.
Given the long and open U.S.-Canada border, Canada will continue to
be targeted by
smugglers for potential transit points to and from the U.S. market.
U.S. and Canadian law
enforcement coordinate closely at all levels to curb trafficking, but
recognize that constant
vigilance is required. Money laundering and chemical diversion are
also problems in Canada.

Canada has a relatively low crime rate compared with most countries
in the Western
Hemisphere, but organized crime and drug trafficking are becoming more
serious problems.
Toronto, Canada's largest city, has experienced growing problems with
organized criminals
from Asia and Russia. Asian ethnic groups, particularly gangs from
China, dominate the
heroin trade, alien smuggling, and credit card fraud, much of which
is aimed at the United
States. Vancouver, which also has significant Asian gang activity,
now suffers from epidemic
drug abuse with nearly one death per day from heroin overdoses. There
have also been
reports that outlaw motorcycle gang activities are on the rise nationwide,
including
methamphetamine trafficking.

Arrests in Europe have also indicated that Romanian and other
criminal groups have
smuggled Turkish-origin heroin to Vancouver as well. Canadian-based
cocaine traffickers
once relied primarily on U.S.-based suppliers, but are increasingly
going directly to
Colombia, according to the RCMP. Shipments arrive via mothership, marine
containers, and
occasionally by clandestine flights. Colombian organizations dominate
the cocaine trade in
eastern and central Canada. Italian organized crime is also involved
in drug trafficking. The
RCMP estimates that between 50-100 tons of foreign marijuana, 100 tons
of hashish (plus 6
tons of liquid hashish), 15 tons of cocaine and at least one ton of
heroin are imported into
Canada each year, producing up to CAN$4 billion in wholesale profits
and CAN$18 billion
in street-level profits.

Canada's drug strategy, the third in a series of five-year plans,
was issued in 1998. While the
strategy is comprehensive, addressing all of the foregoing problems,
it focuses most of its
counternarcotics efforts, and resources (approximately 70%), on domestic
demand reduction.
Building on stronger anti-drug legislation passed in 1997, the Canadian
drug strategy calls for
a new targeting imperative on organized crime by the Solicitor General's
Office.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Canada's large and diverse financial sector,
and lack of mandatory
reporting requirements for suspicious transactions, has become an attractive
venue for
international money launderers. Recognizing this increasing threat,
and responding to
recommendations made to Canada by the Financial Action Task Force (FATF),
the GOC
promulgated control legislation in 1999. It has also taken steps to
increase the capabilities of
Canadian law enforcement authorities to detect suspicious transactions
and to conduct money
laundering investigations. Canada also added ten new integrated proceeds-of-crime
law
enforcement units, based on pilot projects in three cities.

Accomplishments. In 1999 (as of September), Canadian authorities
made 12,541
drug-related arrests (compared with 7,531 in 1998). As of September
1999, GOC authorities
had seized 500 kilograms of cocaine (down from 1.22 metric tons during
the same period in
1998), 51 kilograms of heroin (down from 121 kilograms for this period
in 1998), 4.289
metric tons of marijuana (down from 5.955 metric tons for this period
in 1998), and 3.35
metric tons of hashish (down from 819 kilograms as of September 1998).

Canadian law enforcement operations, often in cooperation with
U.S. agencies, resulted in
the interdiction of numerous large-scale narcotics shipments and disruption
of trafficking
organizations. After a two-year investigation, Royal Canadian Mounted
Police (RCMP)
arrested Alfonso Caruana, reputed leader of the Caruana/Contreara organized
crime family.
This organization was responsible for the acquisition of cocaine in
Mexico, which was
ultimately shipped to the U.S., Canada and Italy. As part of this investigation,
200 kilograms
of cocaine were seized in Houston, Texas.

The RCMP cooperated with the Hong Kong Narcotics Bureau in January
to arrest members
of a heroin ring operating between China and Canada. There were simultaneous
arrests in
Hong Kong, Vancouver and Toronto, along with seizures of large amounts
of heroin and drug
proceeds. Canadian customs inspectors arrested two Hong Kong traffickers
who arrived in
Toronto from Vancouver in possession of 43 kilograms of heroin; they
were en route to
London.

In June, after a three-year investigation, the RCMP launched a
full-scale operation against a
major international heroin ring that had been smuggling large amounts
of Burmese-origin
heroin into Vancouver for distribution in Canada and the U.S. Over
30 suspects were arrested
and 56 kilograms (120 pounds) of heroin seized. According to the RCMP,
the group moved
enough heroin that it could occasionally stockpile supplies in Canada
and drive up prices in
North American markets. Parallel raids and arrests were conducted by
the FBI in New York
and Puerto Rico, and by Thai and Hong Kong authorities. This exceptional
investigative
work and international coordination dismantled the organization.

Law Enforcement Efforts. During 1999, Canadian authorities continued
to implement the
five-year anti-drug strategy issued in 1998. The strategy recognizes
the growing threat from
transnational organized crime, particularly narcotics traffickers,
and directs a concerted effort
against it. In addition to creating proceeds of crime units, the offensive
focuses law
enforcement resources on criminal organizations and money laundering
operations. These
efforts will be enhanced once expected suspicious transaction reporting
requirements
legislation is passed next year and a new financial investigation unit
is created. After five
years of consecutive budget cuts to law enforcement, the improving
national budget situation
permitted an increase in funding in 1999.

While the RCMP has mounted effective operations against narcotics
and other criminal
organizations, the impact of these efforts have been undermined in
numerous cases by court
decisions. Canadian courts have been reluctant to impose tough prison
sentences, often
opting for fines, reflecting a widespread view that drugs are a "victimless"
crime or simply a
health issue, not a criminal or public safety concern. For example,
one court dismissed
charges against an individual arrested for snorting crack in a public
restroom, calling it an
invasion of his privacy. The Supreme Court has questioned the legality
of police involvement
in "sting"-type operations, undercover "buys" and other techniques
now commonly used
around the world in drug investigations, largely on privacy grounds,
as a potential violation
of the 1982 Canadian Charter of Rights and Freedoms. Canadian press
reports indicate that
only about 20% of those convicted of growing marijuana in Vancouver
receive jail terms, and
that British Colombia has the highest rate of acquittal rates in the
nation. In January, a judge
ruled that a convicted criminal, who had already been deported by the
GOC, must be returned
to Canada at GOC expense to pursue his request for refugee status,
despite having aided two
Colombian drug traffickers to escape from jail.

Corruption. Canada holds its officials and law enforcement personnel
to very high standards
of conduct and has strong anti-corruption controls in place. Government
personnel found to
be engaged in malfeasance of any kind are removed and subject to prosecution.

Agreements and Treaties. Canada is a party to the 1988 UN Drug
Convention. The U.S. and
Canada have long-standing agreements on law enforcement cooperation,
including
extradition and mutual legal assistance treaties and an asset sharing
agreement. In 1998, the
RCMP became the first foreign law enforcement organization to be afforded
access to the El
Paso Intelligence Center (EPIC), the USG's tactical drug intelligence
center.

The USG has concluded a Customs Mutual Assistance Agreement (CMAA)
with the
Government of Canada. Canada is also a party to the World Customs Organization's
International Convention on Mutual Administrative Assistance for the
Prevention,
Investigation, and Repression of Customs Offenses (Nairobi Convention),
Annex X on
Assistance in Narcotics Cases.

Canada actively participates in international anti-drug fora including:
the United Nations
International Drug Control Program (UNDCP), the Inter-American Drug
Abuse Control
Commission of the Organization of American States (CICAD), the Dublin
Group, the
Financial Action Task Force, and other groups. Canada is an active
participant in the UN
negotiations on a global crime convention.

During 1998-9, Deputy Solicitor General Jean Fournier chaired
the inter-governmental
working group that negotiated the Multilateral Evaluation Mechanism
(MEM), a hemispheric
peer review system to evaluate each OAS Member State's anti-drug strategies
and efforts.
The MEM, which was mandated by the 1998 Summit of the Americas, was
completed in
Ottawa, Canada in August after 18 months of negotiations. It was approved
by the OAS in
October. The first MEM evaluations will be completed during 2000.

Minister of Foreign Affairs Axworthy organized a Foreign Ministers'
Dialogue Group at the
June OAS General Assembly to explore the drug issue from the perspective
of "Human
Security," including the impact of law enforcement or drug control
activities on individuals
and communities. Canada provided CAN$650,000 to UNDCP for 1998. It
also contributed
CAN$246,900 cash and CAN$132,000 in kind directly to CICAD.

Cultivation and Production. Cannabis is grown throughout the country
and is particularly
abundant in the Provinces of Quebec and British Columbia. While the
GOC does not produce
a formal production estimate, Canadian law enforcement authorities
estimate it at around 800
metric tons per year, with up to 60 percent of that smuggled into the
United States. According
to Canadian intelligence, marijuana cultivation in British Columbia
is a sophisticated, one
billion dollar-a-year growth industry. RCMP investigations suggest
that high-THC content,
hydroponically-grown marijuana is exchanged pound-for-pound with cocaine
from the U.S.
U.S.-produced marijuana is also imported into Canada, although the
level of this activity is
not known.

Domestic Programs. The GOC emphasizes demand reduction in its
drug control strategy
and, along with non-governmental organizations, offers extensive drug
abuse prevention
programs. The focus on prevention is considered a more cost-effective
intervention. There are
substantial regional differences in the patterns of drug abuse. For
example, Vancouver
suffered a wave of heroin overdose deaths while native American communities
in the prairie
provinces were plagued with propane and glue-sniffing and an injected
combination of two
legal drugs (over-the-counter Talwin and prescription Ritalin) known
as "poor-man's heroin."